The New York Times thinks Donald Trump’s tax returns are “a central issue in the campaign.” Others would disagree, but today the Times did what it can to distract voters from Hillary Clinton’s record by publishing three pages of Trump tax returns from 1995, 21 years ago.
The Times explains that someone anonymously mailed the three pages to one of its reporters. They are the front pages from Trump’s New York, Connecticut and New Jersey state tax returns, all from 1995. No IRS documents are included. The returns themselves would have been much more substantial, perhaps hundreds of pages long, but we see only the top-line summary, here.
The supposed bombshell disclosure is that in 1995, Mr. and Mrs. Trump recorded a federal adjusted gross income of -$915,729,293. I assume that loss related in large part to the collapse of the casino and hotel market in Atlantic City, which the Times reported on in another anti-Trump screed. As Trump himself said, “Welcome to the real estate business.”
So, what’s the point? The Times breathlessly proclaims that Trump’s 1995 loss was “so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years.” The Times is simply citing the federal tax code as it existed in 1995: net operating losses could be carried back three years and forward 15 years. (Today, it would be three years back and 20 years forward.) This has nothing to do with how “substantial” the loss was, it simply is how the Internal Revenue Code treats business losses.
The Times tries to suggest, but doesn’t actually say, that Trump may have paid no federal income taxes since 1995:
Although Mr. Trump’s taxable income in subsequent years is as yet unknown, a $916 million loss in 1995 would have been large enough to wipe out more than $50 million a year in taxable income over 18 years.
The $916 million loss certainly could have eliminated any federal income taxes Mr. Trump otherwise would have owed on the $50,000 to $100,000 he was paid for each episode of “The Apprentice,” or the roughly $45 million he was paid between 1995 and 2009 when he was chairman or chief executive of the publicly traded company he created to assume ownership of his troubled Atlantic City casinos.
Given that Forbes believes Trump to have a net worth of $4.5 billion, it seems safe to assume that in the intervening 21 years he has made more than enough money to eat up the $916 million loss carry-forward.
But perhaps not. Perhaps Trump’s wealth consists almost entirely of unrealized real estate appreciation (much as, for example, Warren Buffett’s wealth consists overwhelmingly of unrealized stock appreciation). He and his companies pay, of course, vast amounts of real estate taxes, but he wouldn’t owe income taxes on appreciated assets until he sells his interest. So what?
The Times concedes that “[t]he tax experts consulted by The Times said nothing in the 1995 documents suggested any wrongdoing by Mr. Trump.” Trump does what we all do: he gives his accountant boxes full of documents, and his accountant figures out how much tax he owes. Does the Times think its principal owner, the Mexican multi-billionaire Carlos Slim, pays more in taxes than he owes?
One last observation: unable to offer any evidence of wrongdoing, the Times emphasizes the extraordinary benefit that Trump supposedly gained from losing $916 million in 1995–it was “tax write-off gold.” As though it were a clever ploy to lose $916 million, in hopes of setting off the loss against future income! As usual, the Times relies on its readers’ ignorance and credulity.
UPDATE: Drudge is headlining this Breitbart report on taxes paid (or not paid) by the New York Times:
[T]he Times itself has “avoided” paying taxes — in 2014, for example.
As Forbes noted at the time:
…for tax year 2014, The New York Times paid no taxes and got an income tax refund of $3.5 million even though they had a pre-tax profit of $29.9 million in 2014. In other words, their post-tax profit was higher than their pre-tax profit. The explanation in their 2014 annual report is, “The effective tax rate for 2014 was favorably affected by approximately $21.1 million for the reversal of reserves for uncertain tax positions due to the lapse of applicable statutes of limitations.”
In plain English, that means that the Times had set aside money as a reserve in case the IRS came after it, disputing aggressive income tax positions the paper had taken in prior years. When the statute of limitations ran out so that the IRS could no longer contest the Times’s “uncertain” deductions, the paper recorded a profit. Well done, tax accountants and lawyers!
It does make you wonder, though, whether Barack Obama’s politicized IRS is deliberately failing to enforce the tax laws against pro-Democrat taxpayers like the Times. It would be worth a lot of money to the Democratic Party to keep the Times in business despite its poor financial performance.